Decentralization and Corruption in the Philippines

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corruption perceptions of households are highly correlated with the corruption perceptions of other households in their municipality. Emboldened by these findings, we begin to examine first the causes and then the consequences of corruption. We find strong evidence that voting in local elections is related to lower corruption and weaker evidence that reading national newspapers is related to less corruption. However reading local newspapers has an apparently perverse effect on corruption. We also some find evidence for the hypothesis that increases in discretion enjoyed by local governments lead to increases in local level corruption (Myrdal 1968, Klitgaard 1988). More extensive decentralization, which would increase discretion at the local level while decreasing it at the national level, may merely shift opportunities for corruption and corruption itself from the central to the local government. Taking the example of the scandal that led to the removal of president Estrada, had the local government not required the assent of someone at the center to indulge in the alleged improprieties it seems likely that money would still have changed hands and the gambling allowed, but the money wouldn’t have been shared with the center. We next turn to the consequences of corruption. Here we use several different outcome measures from different sources. We use answers to a test of knowledge question we administered to officials; households reports of waiting time and their satisfaction with government health services; and increases in immunizations and decreases in infectious diseases. In each case we find the expected negative, and often significant, effect of corruption on performance. We also find a number of interesting interrelationships between performance variables like the importance of knowledge of immunizations for other reductions in measles and other infectious diseases. Out results for education are slightly weaker. We do find a significant negative effect on household assessments of satisfaction with schools but only an insignificant effect on test cores. It is possible however that this last insignificant result is caused by the large number of missing observations for test scores. In summary, we find that political disciplines on local governments, especially voting in local elections, has a negative effect on corruption and that adjustability might increase corruption. In terms of the consequences of corruption we find that municipal level corruption has a consistently negative and often significant negative impact on the 4
delivery of primary health services in the Philippines. We briefly analyze the impact of corruption on educational delivery and find some weak evidence that corruption does adversely affect education. We describe the data in section 2. We analyze the causes of corruption in section 3 and turn to consequences in section 4. A conclusion follows. II. Data Description. Our data is based on eight surveys undertaken in 80 Philippine munipalities in the Spring of 2000. We surveyed 1100 households, 80 municipal administrators, health officials and education officials, 19 provincial administrators, health officials and education officials, 160 government health facility workers and 160 school principals – some private (49) and some public (111)-. The sample of households represents 19 provinces, 80 municipalities within them, and 301 barangays within those 80 municipalities. Households can be matched to either schools or health facilities at the barangay level. We begin by discussing our central variable of interest –corruption. We define corruption as the abuse of office for personal gain. We prefer this definition to the conventional “abuse of public office for private gain” because that definition unhelpfully assumes away the possibility of corruption in the private sector 4 . Both our intuitions, and those of private school principals we interviewed in the Philippines, suggest that (say) a teacher taking a bribe to give a better grade, is corrupt in either the public or private sector- and we follow that intuition here. However, except for the public private school comparison, most of what we do in this paper is the analysis of public sector practices and performance, and for most of our practical purposes the two definitions are identical. Corruption manifests itself in several ways: through bribery, the sale of jobs, shirking, and the theft of funds and supplies. We asked questions about all these improprieties in the surveys of government officials. Results are presented in Table 1. There are reports of all kinds of corruption in each kind of government office –with the sole exception of the theft of supplies in the municipal education (DECS) office. Most 5
Page 1 and 2: L:\IrisPhilippines\Paper\Decentrali
Page 3: with kickbacks passed up to the Pre
Page 7 and 8: correlated across surveys. We would
Page 9 and 10: Our meritocracy variable was based
Page 11 and 12: perceptions of corruption using ans
Page 13 and 14: Voting in local elections is highly
Page 15 and 16: objective than other measures we us
Page 17 and 18: variables we have used in this pape
Page 19 and 20: Social differences -an index compos
Page 21 and 22: Bibliography Batalla, Eric, The Soc
Page 23 and 24: Summary Means Table 2 Municipal Lev
Page 25 and 26: Table 3: Cleaning Corruption Percep
Page 27 and 28: Table 6. The Causes of Corruption C
Page 29 and 30: Figure 3 coef = .29191276, se = .13
Page 31 and 32: Figure 4 70.4816 coef = -.20608973,
Page 33 and 34: Figure 5 coef = -.89718686, se = .3
Page 35 and 36: Figure 6 Immunization coef = -.4707
Page 37: Figure 7 coef = -.2679257, se = .18

Decentralization and Corruption in the Philippines

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